Four companies shortlisted ahead of tenders being called for construction of $40 million Newcastle Art Gallery expansion

Those companies will be invited to submit tenders for the work next month, with construction due to begin in mid-2023.

It comes as historic mine tunnels 80 metres below the gallery site continue to be filled with 1500 cubic metres of grout through almost 70 bore holes.

The grouting will continue into the new year.

Newcastle lord mayor Nuatali Nelmes said it was pleasing to see the much-anticipated project progressing towards a key milestone - a tender being awarded for the main construction work.

"After more than 16 years of effort to make this project a reality, we are finally seeing real progress to deliver an expanded and upgraded art gallery of international standing, which will become a fitting home for our nationally significant $126 million collection," she said on Friday.

"By doubling the size of the gallery and significantly increasing the exhibition space to display works of art of local, national and international importance, this project will launch a new era of cultural tourism that will consolidate the Hunter's reputation as an active and vibrant centre for the arts in NSW."

Cr Nelmes said all works of art had been professionally moved to a safe and secure offsite location, and gallery staff had been relocated to City of Newcastle's administration centre in Stewart Avenue ahead of the construction work.

Once complete, the expanded Newcastle Art Gallery will extend the building's footprint east along Darby Street and Queen Street and will include a new café and retail shop, multi-purpose and educational program space, and a secure international standard loading dock.

Federal Newcastle MP Sharon Claydon welcomed the progress of the expansion project.

"Like all Novocastrians, I am delighted to see progress being made on this important project for our region," Ms Claydon said.

"The Newcastle Art Gallery has been at the centre of our city's rich cultural history for over 45 years and this expansion project will ensure its future is assured."

The $40 million project is supported by $5 million from the Australian government under the Regional Recovery Partnerships program and $5 million from the NSW government.

It is also supported by a $10 million bequest from Valerie Ryan and $500,000 in funding from the Margaret Olley Art Trust through the Newcastle Art Gallery Foundation.

Additional fundraising by the foundation is ongoing to help reduce the cost to ratepayers.

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